Puma Energy, a subsidiary of commodity trader Trafigura, is expected to close a $330m, 5-year syndicated loan within 2-3 weeks. The funds will be used to pay for the acquisition of gas stations and storage facilities in Central America and the Caribbean from Exxon completed earlier this year. Citi is leading the deal.
Category: Regions
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Peru Holds Rates
Peru’s central bank kept its reference rate at 4.25% Thursday, in line with market expectations. The bank cites near-potential economic growth as influencing the decision, and indicated it will closely monitor inflation going forward.
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Belize Proposes Restructuring Scenarios
The government of Belize has put forth indicative debt restructuring scenarios including haircuts and maturity extensions for discussion with holders of 2029 “super bonds,” puzzling and spooking analysts. The government contemplates one scenario with no reduction of principal, a 15-year grace period, a 2% coupon and final maturity of 2062. A second sees a 45% haircut, no grace period, and a coupon of 1% through 2019, 2% through 2026 and 4% through a 2042 final maturity. A third would entail a 45% haircut, 5-year grace period, 3.5% coupon, and mature in 2042. “Overall, the government’s strategy is puzzling. On one hand, they are going through the motions in consulting with bondholders and making their case for a restructuring. On the other hand, the lowball offer will undoubtedly anger all bondholders, who would lose tremendously if they participated in such an exchange,” Scotiabank says. The proposed restructuring terms would close the financing gaps facing the country in a sustainable manner, the government says, after the government on March 19 issued a public statement announcing the commencement of a comprehensive and urgent review of its external public sector debt and contingent liabilities. “The three proposals have combinations of haircuts and coupon reductions that go beyond our worst fears. In our view, the short notice of this proposal sounds more like a threat of a credit event than a willingness to negotiate,” Citi says. The shop adds it would not be surprised if the government decides not to pay the full 8.5% coupon rate if no agreement is reached before August 20. An ad-hoc group of at least 10 bondholders representing approximately $200m formed a steering committee last month to engage the government, amid initial talk of restructuring. S&P downgraded Belize’s long-term sovereign ratings to CCC+ from B minus after the country’s Prime Minister Dean Barrow raised debt service as an election issue. Moody’s has downgraded Belize’s credit rating to Ca fro
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CFE Plots Domestic Issue
Mexico’s Comision Federal de Electricidad (CFE) has registered to sell bonds in the domestic market, according to regulatory documents. The state-owned utility has filed for up to MXP50bn (3.8bn), and though the a size and timing of the first issuance have yet to be defined, the issuer is heard considering a 30-year sale with a 15-year average life. Banamex, BBVA Bancomer and Santander are managing the program, rated AAA.
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Mexico to Overtake Brazil by 2022: Nomura
Mexico’s economy may overtake Brazil as LatAm’s largest economy as early as 2022, Nomura says. Mexico outgrew Brazil last year and should again in 2012, and likely beyond. “If our forecast comes true, it will be a LatAm success story based on liberal economic policies and manufacturing productivity, surpassing a commodity-exporting, more statist approach to the economy represented today by Brazil,” Nomura says. This changing scenario is supported by three main trends in the next decade. Brazil should see 4.5% average inflation over the next decade, versus 3.5% for Mexico. The exchange rate will also be a factor, with the real effective exchange rate for both the BRL and MXP to return to their long term average 20 year values. Finally, Mexico’s average GDP growth should be 4.5%, while Brazil slows to 3.0. Mexico grew 3.9% against Brazil’s 2.7% last year, and Nomura forecasts Mexico growing 3.7% this year, against a 1.9% for Brazil. Politically, a more successful, market-friendly Mexican economy will find more resonance in the region than the relatively more interventionist, statist model followed by Brazil and its close regional allies, Argentina and Venezuela, Nomura says. “We are likely to see the region tending back towards more orthodox economic policies, rejecting the commodity-boom fueled brand of left-wing, often populist, politics of the last 10 years,” the bank says.
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Moody’s Lowers Axtel
Moody’s has downgraded Mexico’s Axtel to Caa2 from Caa1, it says, based on a poor liquidity position. The telecom’s low level of cash on hand as of midyear, MXP694m, casts doubt on its ability to face working capital needs and about MXNP450m in interest payments on its bonds. “While earnings and cash flow have been impacted by declining revenues from long distance services, working capital needs have been above trend mostly due to slow collection of receivables from certain government entities,” the agency says. The outlook is negative.
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OHL Mexico Grabs Loan
OHL Mexico has taken out a MXP700m ($53m) loan at the Controladora Via Rapida Poetas unit, it says. The facility was provided by Banobras and Banorte. Officials do not respond to a request for further information. Proceeds fund an extension to the Via Rapida Poetas highway.
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Slim RE Unit Set for Local Bond
Mexico’s Inmuebles Carso is expected to price today up to MXP5bn ($380m) in 2017 domestic bonds, according to sources following the sale. The transaction was originally scheduled for Wednesday. The real estate company spun off from Carlos Slim’s Grupo Carso holdco last year is raising funds to refinance short-term debt. This will be the first issuance under a MXP8bn program. Actinver, Banamex, Bancomer and Inbursa are managing the deal, rated AA+/AA on a national scale.
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Wind Bonds Cross Finish Line
Acciona’s Oaxaca II and IV units have priced $298m in 2031 notes, giving LatAm its first wind energy project bonds. The transaction that bankers and issuers hope can be a model for others had to widen pricing in order to convince investors wary of the deals’ novelty and small size. The issuer ended up paying a 7.25% yield, after giving 6.50%-area guidance earlier in its long roadshow. “It’s the first of its kind, new deal, structure and asset class out of EM and one would expect it to come at a premium that represents value to investors,” says an investor following the sale. The transactions, with $148m and $150m respective sizes, each priced at par with a 7.25% coupon. The price is seen offering at least 300bp premium to offtaker CFE. The deals with a 13-year average life had initially been expected at $164.5m and $167.5m, and were reduced due to the widened pricing. The sale was heard generating a modest order book, with participation from North America, Europe, Asia and LatAm. The issuer decided to go with two smaller transactions in place of a larger more liquid one likely at a tighter spread, according to sources familiar with the deal, based on a need for flexibility. Working in the project’s favor was their lack of construction risk, as well a strong track record for wind generation nearby, most notably the Eurus facility also developed by Acciona. Proceeds from the issuance will refinance the initial debt used to partially pay project construction, fully pay the remaining part of the EPC contract, cover financial expenses, and fund reserve accounts. BBVA, BNP, Credit Agricole, Santander and Societe General managed the transaction, rated BBB minus. Located in the Tehuantepec Isthmus in Oaxaca, considered one of the strongest wind locations in LatAm, the projects began operation in March and each generate 102 megawatts. Bankers hope the deal opens the door for more project bonds, noting there are additional wind energy candidates in the region.
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Dutch Take Brazilian Animal Supplement Maker
Dutch vitamin maker Royal DSM has agreed to acquire Tortuga, a privately-held Brazilian animal nutritional supplement company, for EUR465m ($575m) cash, it says. The move is another example of a European diversifying in to higher-growth markets, as DSM tries to realign its portfolio towards emerging economies. An adjustment can be made to the purchase price bringing the total to as much as EUR490m, based on the actual 2012 Ebitda results and using the same multiple, DSM says. The deal comes at about 7.75x Ebitda multiple, based on 2012 estimated sales, according to a source familiar with the company. “If they’re going to generate value off of this, they’re going to need strong synergies, top and bottom line,” he says, noting that DSM’s nutrition segment earns 20% margins while Tortuga’s earns 16%. The company still has significant funds on its balance sheet that it doesn’t rule out using for further buys, he adds. The purchase is DSM’s seventh globally since a September 2010 change in strategy to focus on growth in its nutrition segment, the company says. The transaction is expected to be immediately earnings per share accretive, DSM says. Tortuga makes mineral supplements for production animals, selling in over nine countries in LatAm.